Exhibit 10.19
MASTER PROGRAM AGREEMENT
This Master Program Agreement dated as of August 1, 2003 (this
"Agreement") by and among CapitalSource Finance LLC, a Delaware limited
liability company ("CapitalSource"), Credit Suisse First Boston Mortgage
Capital, LLC, a Delaware limited liability company ("Repo Counterparty"), Credit
Suisse First Boston LLC, a Delaware limited liability company ("CSFB"), and
Column Financial, Inc., a Delaware corporation ("Column" and, collectively with
Repo Counterparty and CSFB, the "CSFB Parties").
W I T N E S S E T H:
WHEREAS, CapitalSource and Column intend to originate and/or
purchase mortgage loans secured by skilled nursing facilities (the "Loans") and
subsequently securitize such Loans from time to time;
WHEREAS, CapitalSource Funding II LLC ("CapitalSource
Funding") and Repo Counterparty intend to enter into that certain Master
Repurchase Agreement dated August 1, 2003 (the "Repo Agreement") pursuant to
which CapitalSource Funding will be able to finance the origination of certain
of such Loans;
WHEREAS, CapitalSource and the CSFB Parties wish to agree on
the criteria that will make Loans originated by CapitalSource eligible to be
financed under the Repo Agreement and subsequently securitized;
WHEREAS, CapitalSource and the CSFB Parties wish to agree on
the criteria that will make Loans originated by Column eligible for
CapitalSource to purchase a subordinate participation interest and to be
subsequently securitized;
WHEREAS, CapitalSource wishes to purchase certain securities
issued in connection with the securitization of such Loans; and
WHEREAS, CapitalSource and the CSFB Parties wish to agree on
certain other terms of the intended future securitizations of certain of such
Loans.
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Accrued Interest Amount" shall mean, with respect to a Sub-pool
Securitization, the aggregate amount of interest assumed to accrue on each class
of securities assumed to be
issued in such Sub-pool Securitization from the date
on which interest is assumed to begin accruing on such securities to the
settlement date of the Securitization for which the Sub-pool Securitization has
been modeled.
"Aggregate Securitization Proceeds" shall have the meaning given such
term in Section 4.04(b).
"Applicant" shall have the meaning given such term in Section 2.02(b).
"Appraisal" shall mean an appraisal of the subject property, which is
acceptable to the Reviewer of the subject Loan in its reasonable discretion, and
which is prepared (a) by an Approved Appraiser and (b) in accordance with all
applicable regulations issued pursuant to Title XI of the Financial Institution
Reform, Recovery, and Enforcement Act of 1989 and the requirements of the
Standards of Professional Appraisal Practice of the Appraisal Institute and the
Uniform Standards of Professional Appraisal Practice as adopted by the Appraisal
Foundation.
"Appraised Value" means the value set forth in an Appraisal made in
connection with the origination or purchase of a Loan as the value of the
related Mortgaged Property.
"Approved Appraiser" shall mean an appraiser listed on Schedule II or
otherwise approved by the Reviewer.
"Approved Environmental Consultant" shall mean an environmental
consultant listed on Schedule III or otherwise approved by Column.
"Approved Engineering Consultant" shall mean an engineering consultant
listed on Schedule IV or otherwise approved by Column.
"Approved Loan" shall have the meaning given such term in Section
2.02(a).
"Assumed IO Rate" shall have the meaning given such term in Section
4.04(d).
"Business Day" shall mean any day other than a Saturday, Sunday or a day
on which banking institutions in the City of New York, New York are authorized
or obligated by law, executive order or governmental decree to be closed.
"CapitalSource" shall have the meaning given in the first paragraph of
this Agreement.
"CapitalSource Accrued Interest Amount" shall have the meaning given
such term in Section 4.04(d).
"CapitalSource Excess Spread" shall have the meaning given such term in
Section 4.04(a).
"CapitalSource Funding" shall have the meaning given such term in the
Recitals of this Agreement.
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"CapitalSource IO Percentage" shall have the meaning given such term in
Section 4.04(d).
"CapitalSource Junior Class" shall have the meaning given such term in
Section 4.04 (d).
"CapitalSource Junior Percentage" shall have the meaning given such term
in Section 4.04 (d).
"Code" means the Internal Revenue Code of 1986, as amended.
"Column" shall have the meaning given such term in the first paragraph
of this Agreement.
"CSFB Accrued Interest Amount" shall have the meaning given such term in
Section 4.04(d).
"CSFB Fee" shall have the meaning given such term in Section 4.04(e).
"CSFB IO" shall have the meaning given such term in Section 4.04(d).
"CSFB IO Class" shall have the meaning given such term in Section
4.04(a).
"CSFB IO Percentage" shall have the meaning given such term in Section
4.04(d).
"CSFB Junior Class" shall have the meaning given such term in Section
4.04(d).
"CSFB Junior Percentage" shall have the meaning given such term in
Section 4.04 (d).
"CSFB Parties" shall have the meaning given such term in the first
paragraph of this Agreement.
"Depositor" shall have the meaning given such term in Section 4.02.
"Eligibility Criteria" shall mean the criteria listed in Schedule I.
"Engineering Report" shall mean an engineering/architectural review of
the subject property conducted by an Approved Engineering Consultant, which is
acceptable to the Reviewer of the subject Loan in its reasonable discretion, and
which will (a) consider, among other things, structural adequacy, special
hazards (e.g., sinkholes, earthquakes), soil conditions, foundation stability,
quality of physical maintenance, adequacy of site drainage, design defects that
may lead to unusual capital expenditures, adequacy of utilities, roof
structures, HVAC systems, fire and safety systems and overall evaluation of
construction quality and design and (b) summarize (i) the current condition of
the property, including any deferred maintenance, (ii) any immediate repairs
needed and the estimated cost and (iii) anticipated capital repairs and
improvements and the estimated cost.
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"Environmental Report" shall mean an ASTM standard Phase I Environmental
Assessment prepared by an Approved Environmental Consultant, which is acceptable
to the Reviewer of the subject Loan in its reasonable discretion, and which
identifies historical and current "Recognized Environmental Conditions" using
the methodology recommended by ASTM specifically referred to as Standard
Practices of Environmental Assessments: Phase I Environmental Site Assessment
Process Designation: E 1527-00 (without exception therefrom) and addresses the
common risks associated with commercial real estate, including (a) asbestos, (b)
PCB, (c) radon, (d) pollution/chemical waste, (e) noise/odors, (f) other latent
chemical exposure, including lead, (g) HVAC systems and (h) mold and, if
recommended by such Phase I Environmental Assessment, a Phase II Environmental
Assessment with appropriate physical sample analysis to establish the presence
or absence of a hazardous element.
"Event of Default" shall have the meaning given such term in the Repo
Agreement.
"Excess Spread" shall have the meaning given such term in Section
4.04(a).
"Interim Servicing Agreement" shall have the meaning given such term in
Section 4.09(a).
"Investment Grade Subordinate Securities" shall have the meaning given
such term in Section 4.03.
"Junior Participation Interest" shall have the meaning given such term
in Section 3.01.
"LIBOR" shall have the meaning given such term in the form documents
attached as Exhibit C.
"Loan" shall have the meaning given such term in the Recitals.
"Loan Summary" shall mean a summary substantially in the form attached
hereto as Exhibit A.
"Loan-to-Value Ratio" shall mean, with respect to any Loan, the ratio of
the outstanding principal amount of the Loan as of the date on which such Loan
is submitted for approval under Section 2.02 to the Appraised Value of the
related Mortgaged Property, expressed as a percentage.
"Moody's" shall mean Xxxxx'x Investors Service, Inc.
"Mortgage" shall mean each mortgage, assignment of rents, security
agreement and fixture filing, or deed of trust, assignment of rents, security
agreement and fixture filing, deed to secure debt, assignment of rents, security
agreement and fixture filing, or similar instrument creating and evidencing a
lien on real property and other property and rights incidental thereto.
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"Mortgage Note" shall mean the promissory note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage.
"Mortgaged Property" shall mean the real property securing repayment of
the debt evidenced by a Mortgage Note.
"Mortgagor" shall mean the obligor or obligors on a Mortgage Note,
including any person who has assumed or guaranteed the obligations of the
obligor thereunder.
"Net WAC" shall have the meaning given such term in Section 4.04(a).
"Participation Interests" shall have the meaning given such term in
Section 3.01.
"Pipeline Registry" shall have the meaning given such term in Section
2.03.
"Portfolio" means all Portfolio Mortgage Loans which are
cross-collateralized and/or cross-defaulted with each other.
"Portfolio Mortgage Loan" means a Loan which is part of a portfolio of
cross-collateralized and/or cross-defaulted mortgage loans.
"Prime Rate" shall have the meaning given such term in the form
documents attached as Exhibit C.
"Related Proceeding" shall have the meaning given such term in Section
6.10.
"REMIC" shall mean "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"Reviewer" shall have the meaning given such term in Section 2.02(b).
"S&P" shall mean Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc.
"SEC" shall mean the Securities and Exchange Commission, or any
successor thereto.
"Securitization" shall have the meaning given such term in Section 4.01.
"Senior Participation Interest" shall have the meaning given such term
in Section 3.01.
"Senior Participation Securitization" shall have the meaning given such
term in Section 4.01(b).
"Structured Yield" shall have the meaning given such term in Section
4.04(d).
"Subordinated Securities" shall have the meaning given such term in
Section 4.03.
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"Sub-pool Securitization" shall have the meaning given such term in
Section 4.04(d).
"Underwriting Guidelines" shall mean the underwriting guidelines agreed
to by CapitalSource and the CSFB parties, as amended from time to time upon the
mutual agreement of CapitalSource and the CSFB parties, a copy of which is
attached hereto as Exhibit B.
Section 1.02 Interpretations.
(a) All terms defined in this Agreement shall have the defined meanings
set forth in Section 1.01 when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined in such certificate or
document.
(b) The words "including" and "include" shall be deemed to be followed
by the words "without limitation." All references in this Agreement to
designated Articles, Sections, Schedules, Exhibits and other subdivisions are,
unless otherwise specified, to designated Articles, Sections, Schedules,
Exhibits and subdivisions of this Agreement. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provisions of this
Agreement. All words importing the singular number include the plural number and
vice versa; and all words importing the masculine gender include the feminine
gender.
(c) Article, Section, Schedule and Exhibit headings used herein are for
convenience of reference only, are not part of this Agreement and shall not
affect the construction of, or be considered in interpreting, this Agreement.
(d) Schedules and Exhibits to this Agreement shall be considered part of
this Agreement.
ARTICLE II
LOAN ELIGIBILITY AND APPROVAL
Section 2.01 Eligibility Criteria. Unless otherwise agreed to in writing
in the sole discretion of Column (acting for itself and Repo
Counterparty), in order to be eligible to be financed in accordance with
the Repo Agreement, a Loan originated by CapitalSource must satisfy the
Eligibility Criteria listed on Schedule I. Subject to the immediately
succeeding sentence and unless otherwise agreed to in writing in the
sole discretion of CapitalSource (in the case of Loans originated or
purchased by Column) or Column (acting for itself and CSFB in the case
of Loans originated or purchased by CapitalSource), in order to be
eligible to be included in a securitization undertaken in accordance
with Section 4.01, a Loan originated or purchased by CapitalSource or
Column must satisfy the Eligibility Criteria at the time of origination
and, unless otherwise mutually agreed by the parties hereto, at the time
of intended securitization.
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Section 2.02 Procedure for Approval of Mortgage Loans.
(a) CapitalSource acknowledges and agrees that it must obtain Column's
approval of a Loan (which, if granted, shall be granted by Column on behalf of
Column and Repo Counterparty) in accordance with the procedures described in
Section 2.02(b)-(d) before such Loan may be financed under the Repo Agreement or
included in a securitization undertaken in accordance with Section 4.01. Column
acknowledges and agrees that it must obtain CapitalSource's approval of a Loan
in accordance with the procedures described in Section 2.02(b)-(d) before
CapitalSource will be required to purchase a subordinate participation interest
therein pursuant to Section 3.01, and before such Loan can be included in a
securitization undertaken in accordance with Section 4.01. Each Loan that has
been approved in accordance with the procedures set forth in Section 2.02(b)-(d)
shall be an "Approved Loan." Repo Counterparty agrees to finance under the Repo
Agreement each Approved Loan originated by CapitalSource; provided, that,
CapitalSource submit such Approved Loan for financing under the Repo Agreement
in accordance with the terms of the Repo Agreement within sixty (60) days of the
date on which such Approved Loan is approved as an Approved Loan hereunder. Each
Approved Loan originated or purchased by either CapitalSource or Column may be
included in a securitization undertaken in accordance with Section 4.01 if, at
the time of intended securitization, it satisfies the requirements of the
relevant rating agencies.
(b) The party seeking approval of a Loan ("Applicant") shall submit to
the party from whom approval is being sought ("Reviewer") an application package
that shall include the following as each relates to such Loan:
(i) financial statements with respect to the nursing facility for the
immediately preceding three years to the extent available and a full
underwriting of the related property accompanied by an agreed upon
procedures letter verifying such financial statements and underwriting;
(ii) name of borrower and property manager and a description of
experience;
(iii) a completed Loan Summary (i.e., a credit write-up);
(iv) term sheet, indicating primary loan terms (including a quote of an
interest rate spread to LIBOR or the Prime Rate);
(v) an Appraisal dated no earlier than six months prior to submission of
the application package;
(vi) an Environmental Report;
(vii) an Engineering Report;
(viii) cost reports for the immediately preceding three years to the
extent available (including a medicare contract and, if applicable, a
certificate of need);
(ix) photographs showing principal interior and exterior aspects of the
Mortgaged Property including the main entrance and representative resident
rooms;
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(x) maps showing the location of the city in which the Mortgaged
Property is located and of the Mortgaged Property within such city;
(xi) the draft Note (marked to show changes from the form
document attached as part of Exhibit C);
(xii) the draft mortgage (marked to show changes from the form
document attached as part of Exhibit C);
(xiii) the draft cash management agreement (marked to show
changes from the form document attached as part of Exhibit C);
(xiv) draft guaranties and indemnities (marked to show changes
from the form documents attached as part of Exhibit C);
(xv) any post-closing obligation letters, to the extent
available at such time; and
(xvi) any draft receivables agreements, which shall include the
amount of the related receivable line.
(c) Reviewer shall, in writing, approve or reject the proposed
Loan within seven (7) Business Days after receipt of all items listed in Section
2.02(b) above. Should any such items be materially modified or amended after
being submitted to Reviewer, Applicant shall resubmit such modified or amended
items to Reviewer for approval in accordance with this Section 2.02.
Notwithstanding anything contained herein to the contrary and regardless of
whether the proposed Loan meets the Eligibility Criteria, a Reviewer may reject
any proposed Loan in its absolute discretion.
(d) In connection with the process provided for in this Section
2.02, Applicant agrees, with respect to each Loan submitted by it for approval,
to investigate completely and thoroughly every underwriting and legal matter in
accordance with the Underwriting Guidelines, and, with respect to matters not
addressed by the Underwriting Guidelines, to use such origination and
underwriting practices as a reasonably prudent lender would use in underwriting
and originating Loans comparable to the subject mortgage loans and exercising a
standard of care customary in the commercial mortgage lending industry. In
addition, Applicant agrees to use the form documents attached as Exhibit C in
originating the Loans submitted for approval hereunder and to only make those
changes to such forms as are reasonably necessary.
(e) Loans may be submitted by CapitalSource for approval
hereunder only so long as (i) CapitalSource is entitled to submit Loans for
financing under the Repo Agreement and (ii) no Event of Default has occurred and
is continuing.
Section 2.03 Registration of Loans. CSFB and CapitalSource agree
to utilize CSFB's loan registry (located at xxx0.xxxxxxxxxxxxxxx.xxx/xxxxxxxx/)
(the "Pipeline Registry").
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ARTICLE III
PURCHASE OF PARTICIPATION INTERESTS
Section 3.01 Participation Interests. CapitalSource agrees to
purchase from Column a 20% subordinate, first-loss participation interest (a
"Junior Participation Interest") in any Approved Loan originated by Column.
Column will initially retain an 80% senior participation interest in such loans
(a "Senior Participation Interest" and, together with the Junior Participation
Interest, the "Participation Interests"). CapitalSource shall purchase each
Junior Participation Interest at a price equal to par, and such Junior
Participation Interest will accrue interest in an amount equal to the lesser of
(i) a portion of the mortgage interest accruals on the Approved Loan such that
CapitalSource receives a 20% annualized yield on such Junior Participation
Interest, or (ii) 100% of the mortgage interest accruals on such Approved Loan.
Section 3.02 Participation Agreement. The Participation
Interests in each Approved Loan will be governed by the terms of a participation
agreement between Column and CapitalSource (each, a "Participation Agreement")
substantially in the form attached hereto as Exhibit D.
ARTICLE IV
SECURITIZATION OF APPROVED LOANS
Section 4.01 Timing of Securitizations.
(a) At such time as the parties mutually agree, CapitalSource and CSFB
shall arrange for the securitization of any or all existing Approved Loans (each
such securitization, a "Securitization"). The decision of the parties to
commence a Securitization shall be binding on such parties, unless (i) either
party notifies the other party of its decision to withdraw from the
Securitization within two Business Days after receipt of preliminary
subordination levels from the relevant rating agencies or (ii) the actual final
subordination levels required by the relevant rating agencies to support
investment-grade securities (i.e., the principal balance of all securities rated
below "BBB-") exceeds the preliminary subordination levels indicated by the
rating agencies with respect to such securities by more than 2% of the aggregate
principal balance of the Approved Loans to be included in such proposed
securitization.
(b) In the event that CapitalSource and CSFB cannot mutually agree to
arrange for the securitization of the Approved Loans, CSFB may elect to
securitize its Senior Participation Interests at any time in its sole discretion
(each such securitization of the Senior Participation Interests, a "Senior
Participation Securitization"). CSFB shall ensure that any servicing agreement
prepared in connection with any Senior Participation Securitization is not
inconsistent with any related Participation Agreement.
Section 4.02 General Structure of Securitization. CSFB shall cause its
affiliate, Credit Suisse First Boston Mortgage Securities Corp. (the
"Depositor"), to act as depositor of each Securitization. With respect to each
Securitization, CapitalSource will sell the Approved Loans that it originated,
and each of CapitalSource and Column will sell its respective
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Participation Interest in the Approved Loan originated by Column, to the
Depositor pursuant to a mortgage loan purchase and sale agreement in form and
substance customary for similar transactions and acceptable to the relevant
rating agencies. Following the purchase by the Depositor of both Participation
Interests with respect to any Loan, the Participation Agreement with respect to
such Loan shall be terminated. The Depositor shall have control over the
structure of the Securitization and shall manage the Securitization process
(including the selection of rating agencies and hiring of service providers
(including, without limitation, the lead counsel, accountants, financial printer
and trustee) in connection therewith), subject to the requirements of this
Article IV. Notwithstanding the foregoing, CapitalSource shall have the right to
disapprove any major decision of the Depositor with respect to a Securitization
to the extent that CapitalSource reasonably disagrees with such decision;
provided that all decisions with respect to a Securitization undertaken pursuant
to Section 4.01(b) shall be made by the Depositor in its sole and absolute
discretion. With respect to each Securitization, each of CapitalSource and
Column agree to provide any additional documents related to the origination of
the subject mortgage loans as required by the relevant rating agencies.
Section 4.03 Purchase of Securities. With respect to each
Securitization, CapitalSource agrees to purchase at closing (or, in the sole
discretion of CSFB, within two weeks thereof) the Subordinated Securities.
Notwithstanding the foregoing, CapitalSource shall have no obligation to
purchase any Subordinated Securities in connection with a Senior Participation
Securitization. "Subordinated Securities" shall mean, with respect to a
Securitization, the greater of (i) all of the securities issued in such
Securitization with a rating by at least one rating agency below "BBB-" or the
equivalent, or (ii) the most subordinated securities issued in such
Securitization having an aggregate principal amount equal to 20% of the
aggregate principal balance of all of the securities issued in such
Securitization (the portion of such Subordinated Securities having a rating of
at least "BBB-" or the equivalent being referred to herein as the "Investment
Grade Subordinate Securities"). CapitalSource shall pay a purchase price to the
Depositor for the Subordinated Securities equal to 100% of the principal balance
thereof (which purchase price shall be a portion of the aggregate Securitization
proceeds to be divided pursuant to Section 4.04). In connection with each such
purchase of securities, CapitalSource shall make representations and warranties
that are customary for the purchaser of securities to make in similar
transactions.
Section 4.04 Division of Securitization Proceeds; Excess Spread.
(a) Each Securitization shall be in a multi-class, senior/subordinated
trust structure. The interest rates on the various classes of investment grade
securities shall be set so as to achieve the maximum aggregate sales prices for
such classes. The classes of Subordinated Securities shall accrue interest at a
rate equal to the sum of (i) the weighted average of the interest rates on the
Approved Loans included in the Securitization (calculated on the basis of a
360-day year of twelve 30-day months), net of trustee and servicing fees (the
"Net WAC") and (ii) the portion of the Excess Spread allocable to CapitalSource
pursuant to the succeeding sentence and Sections 4.04(c) and (d) below. Interest
accruing at a rate equal to the excess of the Net WAC over the weighted average
of the interest rates on the classes of securities other than the Subordinated
Securities on a notional balance equal to the aggregate principal balance of
such classes (calculated on the basis of a 360-day year of twelve 30-day months)
("Excess Spread") shall be divided between CapitalSource (as increased interest
on the Subordinated
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Securities) (the "CapitalSource Excess Spread") and a class of interest-only
securities to be purchased by CSFB ( the "CSFB IO Class").
(b) With respect to each Securitization, the actual proceeds of the
sale of all classes of securities other than the CSFB IO Class and the
Subordinated Securities (with the proceeds of the sale of the Subordinated
Securities being assumed for purposes of this Section 4.04(b) to be par) and the
assumed proceeds of the sale of the Subordinated Securities (collectively for
each Securitization, the "Aggregate Securitization Proceeds"), exclusive of
accrued interest collected shall be allocated pro rata in accordance with the
principal balance of Loans and Participation Interests contributed to the
Securitization by Column on the one hand and CapitalSource on the other. Accrued
interest collected from the sale of all certificates in connection with a
Securitization, including the CSFB IO and Excess Spread allocated to
CapitalSource in Section 4.04(c), shall be allocated pro rata based on the CSFB
Accrued Interest Amount and the CapitalSource Accrued Interest Amount. Aggregate
Securitization Proceeds allocated to CapitalSource will be applied first in
reduction of the assumed purchase price of the Subordinated Securities before
any actual proceeds are distributed to CapitalSource.
(c) With respect to each Securitization, CapitalSource shall be
entitled to the CapitalSource IO Percentage (as defined below) of the Excess
Spread (by notional balance). CapitalSource will further be entitled to the
portion, if any, of the CSFB IO Percentage (as defined below) of the Excess
Spread (by notional balance) which, when added to the interest accruing on the
CSFB Junior Certificates (as defined below at the pass-through rate thereof,
will give CapitalSource the lesser of (i) (A) a coupon on the aggregate
principal amount of the portion of the CSFB Junior Certificates constituting
Investment Grade Subordinate Securities (but such portion not to exceed 5% of
the aggregate principal balance of all the securities issued in such
Securitization), of 10%, (calculated on the basis of a 360-day year of twelve
30-day months), plus (B) a coupon on the aggregate principal amount of the
remaining portion of the CSFB Junior Certificates, of 17%, (calculated on the
basis of a 360-day year of twelve 30-day months); or (ii) 100% of the CSFB IO
Percentage of the Excess Spread. Any remaining portion of the CSFB IO Percentage
of the Excess Spread that CapitalSource is not entitled to pursuant to the
preceding sentence will be divided 60% to CSFB and 40% to CapitalSource.
(d) In order to calculate the CSFB IO Percentage, the CapitalSource IO
Percentage, the CSFB Junior Percentage, the CapitalSource Junior Percentage, the
CSFB Accrued Interest Amount and the CapitalSource Accrued Interest Amount with
respect to any Securitization, CSFB shall model each Securitization as two
separate securitizations ("Sub-pool Securitizations"), with one such Sub-pool
Securitization including all Loans contributed by CapitalSource and the other
such Sub-pool Securitization including all Loans contributed by Column
(including both Senior Participation Interests and Junior Participation
Interests with respect to such Loans), but otherwise having identical class
structures and pass-through rates (other than (i) the pass-through rates of the
interest only classes, which will be derived from the Net WAC of the related
Loans and the pass-through rates of the other classes (such interest only
coupons, the "Assumed IO Rates"), (ii) class sizes, which will be based upon the
sub-pool subordination levels supplied by the rating agencies rating such
Securitization, and (iii) the pass-through rates of the junior classes, which
will be equal to the Net WAC of the related Loans and (iv) Accrued Interest
Amounts). With respect to a Securitization, (i) the assumed interest only class
from the related Sub-pool Securitization assumed to include the CapitalSource
Loans is
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referred to as the "CapitalSource IO" and the assumed interest only class from
the related Sub-pool Securitization assumed to include the Column Loans is
referred to as the "CSFB IO," and (ii) the Accrued Interest Amount from the
related Sub-pool Securitization assumed to include the Capital Source Loans is
referred to as the "CapitalSource Accrued Interest Amount" and the Accrued
Interest Amount from the related Sub-pool Securitization assumed to include the
Column Loans is referred to as the "CSFB Accrued Interest Amount." The
"CapitalSource IO Percentage" for each Securitization will be equal to a
fraction, expressed as a percentage, (X) the numerator of which is product of
the initial pass-through rate of the related CapitalSource IO and the initial
notional amount thereof, and (Y) the denominator of which is the sum of the
amount calculated in clause (X) and the product of the initial pass-through rate
of the Related CSFB IO and the initial notional amount thereof. The "CSFB IO
Percentage" for each Securitization will be equal to 100% minus the related
CapitalSource IO Percentage. With respect to a Securitization, the assumed
Subordinated Securities from the related Sub-pool Securitization (i.e., the most
subordinate 20% or, if greater, the non-investment grade classes) assumed to
include the CapitalSource Loans is referred to as the "CapitalSource Junior
Class" and the assumed Subordinated Securities from the related Sub-pool
Securitization (i.e., the most subordinate 20% or, if greater, the
non-investment grade classes) assumed to include the Column Loans is referred to
as the "CSFB Junior Class." The "CapitalSource Junior Percentage" for each
Securitization will be equal to a fraction, expressed as a percentage, (X) the
numerator of which is the principal balance of the CapitalSource Junior Class,
and (Y) the denominator of which is the aggregate principal balance of the
CapitalSource Junior Class and the CSFB Junior Class. The "CSFB Junior
Percentage" for each Securitization will be equal to 100% minus the related
CapitalSource Junior Percentage. The "CSFB Junior Certificates" for any
Securitization will be a portion of the Subordinated Securities issued in such
Securitization equal to the product of the CSFB Junior Percentage and the
aggregate principal balance of the Subordinated Securities.
(e) In the event that, with respect to any Securitization, either (i)
par execution is not achieved with respect to any class of certificates (other
than the Subordinated Securities or the CSFB IO Class) or (ii) the projected
performance of the related CapitalSource IO and the related CSFB IO (calculated
using consistent CPR assumptions and other standard assumptions for CMBS
modeling) differ materially from each other (due to variations in lock-out
period or principal payment characteristics of the related Loans), then the
parties shall agree on appropriate variations to the above-described
methodologies for division of Securitization proceeds and Excess Spread.
(f) In addition, if the Approved Loans sold by Column or CapitalSource
with respect to any Securitization include loans that accrue interest at a
variable rate that is tied to LIBOR but that, pursuant to the related loan
documents, never falls below a certain minimum rate (such minimum rate, the
"LIBOR Floor"), then the securities issued by such Securitization shall include
a class (or, if such Loans are sold by both Column and CapitalSource into a
particular Securitization, two classes) of interest-only certificates (such
class or classes, the "LIBOR Floor Certificates") which shall represent the
right to receive, with respect to such Approved Loans, the excess, if any, of
the LIBOR Floor over LIBOR. CapitalSource shall be entitled to the LIBOR Floor
Certificates relating to its Approved Loans. The LIBOR Floor Certificates
relating to the Approved Loans contributed by CSFB will be divided in the same
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manner as, and treated as part of, the CSFB IO Percentage of Excess Spread in
accordance with Section 4.04(c) hereof.
Section 4.05 Source of Loans for Securitizations. Unless agreed to by
CapitalSource, Column and CSFB (each in its sole discretion), no Loans other
than Approved Loans may be included in any Securitization.
Section 4.06 Manager of Securitizations. CSFB shall be the sole lead
manager and sole book runner on any securitization of Approved Loans that are
financed under the Repo Agreement.
Section 4.07 Manager's Fee. CapitalSource will pay CSFB a fee, as
structurer and placement agent/underwriter for each Securitization, of 1.00% of
the total principal balance of all the securities created pursuant to such
Securitization (the "CSFB Fee"). The CSFB Fee with respect to a Securitization
shall be payable on the closing date of such Securitization.
Section 4.08 Origination and Exit Fees. CapitalSource shall be entitled
to receive all origination fees and exit fees with respect to Approved Loans
originated by CapitalSource and included in a Securitization. CSFB shall be
entitled to receive all origination fees with respect to Approved Loans
originated by Column and included in a Securitization. CapitalSource shall be
entitled to receive all exit fees with respect to Approved Loans originated by
Column and included in a Securitization; provided, however, that CapitalSource
shall not receive any such exit fees in connection with a Senior Participation
Securitization or in the event that it does not purchase the Subordinated
Securities as required by Section 4.03.
Section 4.09 Servicing.
(a) After the origination but prior to the securitization of the Loans
originated by Column, ORIX Real Estate Capital Markets LLC or such other
servicer that is reasonably acceptable to the parties to this Agreement will act
as servicer and CapitalSource will act as special servicer. After the
origination but prior to the securitization of the Loans originated by
CapitalSource, ORIX Real Estate Capital Markets LLC or such other servicer that
is reasonably acceptable to the parties to this Agreement will act as servicer
and CapitalSource will act as primary servicer and special servicer. In each
case, the servicing arrangement shall be documented in a separate interim
servicing agreement (each, an "Interim Servicing Agreement") which shall be in
form and substance reasonably acceptable to the parties hereto. Upon the
consummation of a Securitization or a Senior Participation Securitization, the
Interim Servicing Agreement will terminate with respect to any Approved Loans or
Senior Participation Interests securitized therein and no compensation shall be
due to CapitalSource in connection with such termination.
(b) The Depositor shall choose the servicer for each Securitization or
Senior Participation Securitization; provided, that, the servicer of the
Approved Loans that are securitized must be on S&P's approved list of servicers
rated at least CMS3 by Fitch and acceptable to Xxxxx'x. CapitalSource shall
choose the special servicer for each Securitization; provided, that, the special
servicer of the Approved Loans that are securitized must be on S&P's approved
list of special servicers and must be acting as special servicer in one or more
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commercial mortgage loan securitizations that was rated by
Xxxxx'x and Fitch in the prior six (6) months and Xxxxx'x or Fitch, as
applicable, has not downgraded or withdrawn the then-current rating on
any class of commercial mortgage securities or placed any class of
commercial mortgage securities on watch citing the continuation of such
special servicer as special servicer of such commercial mortgage
securities; provided, further, that CapitalSource shall not be entitled
to choose the Special Servicer in connection with a Senior Participation
Securitization or in the event that it does not purchase the
Subordinated Securities as required by Section 4.03.
(c) CSFB agrees to reasonably cooperate with CapitalSource in
CapitalSource's efforts to obtain the necessary approvals and ratings to enable
CapitalSource or an affiliate to act as servicer and special servicer of the
Securitizations.
(i) If, prior to a Securitization, CapitalSource receives all
such approvals and ratings, CSFB and CapitalSource agree that
CapitalSource shall be retained as the servicer and/or special servicer
for such Securitization and shall be compensated therefor at an annual
rate consistent with then-market standards; provided, however, that
CapitalSource shall not be retained as the servicer and/or special
servicer in connection with a Senior Participation Securitization or in
the event that it does not purchase the Subordinated Securities as
required by Section 4.03. CapitalSource agrees to pay all expenses
related to the process of obtaining the necessary approvals and ratings
to enable it to act as servicer and special servicer of the
Securitizations.
(ii) If, prior to a Securitization, CapitalSource fails to
receive all such approvals and ratings, CSFB and CapitalSource agree
that any servicer or special servicer retained for such Securitization
shall agree to retain CapitalSource as sub-servicer or sub-special
servicer, as applicable.
Section 4.10 Expenses. Each of CSFB and CapitalSource agrees to
pay (or cause to be paid) its pro rata share of the following expenses with
respect to each Securitization based on the proportion that the principal amount
of the Approved Loans that Column (in the case of CSFB) and CapitalSource
contributes to such Securitization bears to the total aggregate principal amount
of the Approved Loans included in such Securitization: (a) the reasonable fees,
disbursements and expenses of counsel to the CSFB Parties and counsel to
CapitalSource in connection with the issuance of the securities in such
Securitization and all other reasonable expenses in connection with the
preparation of the related offering document and closing documents (including
any compilations thereof) and any other documents in connection with the
offering, purchase, sale and delivery of such securities; (b) the reasonable
fees of accountants in connection with the issuance of such securities; (c) all
expenses in connection with the qualification of such securities, if any, for
offering and sale under state securities laws, including the fees and
disbursements of counsel in connection with such qualification and in connection
with Blue Sky and legal investment surveys; (d) the fees charged by the rating
agency or agencies for rating the securities or the Approved Loans proposed to
be included in such Securitization which ratings have been solicited by any CSFB
Party; (e) if CapitalSource is not the servicer or special servicer for such
Securitization, the reasonable up front fees and expenses of the servicer and/or
special servicer and the reasonable fees and disbursements of counsel for the
servicer and/or special servicer in connection with the preparation and review
of the transaction documents; (f) the reasonable up front fees and expenses of
any trustee and the
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reasonable fees and disbursements of its counsel in connection with the
preparation and review of the transaction documents; (g) the fees of the
financial printer with respect to such Securitization; (h) any cost incurred in
connection with the designation of such securities for trading on PORTAL; and
(i) any additional fees or costs incurred by any CSFB Party in connection with
the purchase, sale and transfer of the Approved Loans to be included in such
Securitization. It is understood, however, that except as provided in this
Section 4.10 and in accordance with Section 4.11, each CSFB Party and
CapitalSource will pay all of its own costs and expenses with respect to each
Securitization; provided, however, that CapitalSource will pay all of the
reasonable loan due diligence expenses incurred by CSFB, including the
reasonable fees of counsel to any CSFB Party, in connection with the on-going
review of Approved Loans proposed to be included in such Securitization that
have not been originated by CSFB or an affiliate. CapitalSource agrees to pay
50% of all of the reasonable costs and expenses of CSFB, Repo Counterparty and
Column (including legal fees and expenses) in connection with the transactions
contemplated by this Agreement and the Repo Agreement (other than the
Securitizations).
Section 4.11 Indemnification. With respect to each Securitization,
CapitalSource will indemnify the Depositor, CSFB and any co-underwriters against
losses, claims, damages or liabilities to which any such party may become
subject in connection with (i) misstatements or omissions from related
disclosure documents concerning the Approved Loans contributed by CapitalSource
to such Securitization, (ii) CapitalSource or (iii) any other information
provided by CapitalSource for inclusion in such disclosure documents, such
indemnity to be in a form that is customary in similar transactions.
Section 4.12 Representations and Warranties with Respect to the Approved
Loans. As of the closing date of each Securitization, CapitalSource shall make
the representations and warranties concerning the mortgage loans being sold by
it to the Depositor substantially in the form set forth on Schedule 1 to the
Repo Agreement (subject to any necessary exceptions, which must be approved in
writing by CSFB), with any changes or additions to such representations and
warranties as the relevant rating agencies or investors may require. As of the
closing date of each Securitization, Column shall make the representations and
warranties concerning the loans being sold by it to the Depositor substantially
in the form set forth on Schedule 1 to the Repo Agreement (subject to any
necessary exceptions, which must be approved in writing by CSFB), with any
changes or additions to such representations and warranties as the relevant
rating agencies or investors may require.
Section 4.13 Refinancing of Approved Loans. CSFB acknowledges that by
the terms of the transaction documents underlying Approved Loans originated by
CapitalSource, CapitalSource may have the right of first refusal to refinance
such Approved Loans. CapitalSource acknowledges that by the terms of the
transaction documents underlying Approved Loans originated by Column, Column may
have the right of first refusal to refinance such Approved Loans.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01 Representations and Warranties of CapitalSource.
CapitalSource represents and warrants to each of the CSFB Parties that:
(a) this Agreement has been duly authorized, executed and delivered by
CapitalSource and constitutes the legal, valid and binding obligation of
CapitalSource, enforceable against CapitalSource in accordance with its terms
under New York law, except as such enforcement may be affected by bankruptcy, by
other insolvency laws or by general principles of equity;
(b) no consent, approval, authorization or order of any New York or
federal governmental agency or body or any New York or federal court is required
for the consummation by CapitalSource of the transactions contemplated by the
terms of this Agreement, except such consents, approvals, authorizations,
filings and notices that have already been made or obtained;
(c) the consummation by CapitalSource of any of the transactions
contemplated by the terms of this Agreement do not conflict with or result in a
breach or violation of any material term or provision of, or constitute a
default under, the certificate of incorporation or bylaws of CapitalSource, or
any indenture or other agreement or instrument to which CapitalSource is a party
or by which it is bound, or any New York or federal statute or regulation
applicable to CapitalSource or any order of any New York or federal court,
regulatory body, administrative agency or governmental body having jurisdiction
over CapitalSource;
(d) CapitalSource is a limited liability company created, organized,
existing and in good standing under the laws of Delaware and has the corporate
power to engage in the transactions contemplated by this Agreement; and
(e) there is no investigation, action, litigation or administrative
proceeding of or before any court, tribunal or governmental body currently
pending or, to the knowledge of CapitalSource, threatened against CapitalSource
(i) that would be likely to affect materially and adversely the validity or
enforceability of this Agreement, or (ii) that could reasonably be expected to
result in any material adverse change in the business, operations, financial
conditions, properties or assets of CapitalSource or the ability of
CapitalSource to carry on its business substantially as it is now conducted.
Section 5.02 Representations and Warranties of the CSFB Parties. Each of
the CSFB Parties represents and warrants to each other party hereto with respect
to itself that:
(a) this Agreement has been duly authorized, executed and delivered by
it and constitutes its legal, valid and binding obligation, enforceable against
it in accordance with its terms under New York law;
(b) no consent, approval, authorization or order of any New York or
federal governmental agency or body or any New York or federal court is required
for the
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consummation by it of the transactions contemplated by the terms of this
Agreement, except such consents, approvals, authorizations, filings and notices
that have already been made or obtained;
(c) the consummation by it of any of the transactions contemplated by
the terms of this Agreement do not conflict with or result in a breach or
violation of any material term or provision of, or constitute a default under,
its certificate of incorporation or bylaws, or any indenture or other agreement
or instrument to which it is a party or by which it is bound, or any New York or
federal statute or regulation applicable to it or any order of any New York or
federal court, regulatory body, administrative agency or governmental body
having jurisdiction over it;
(d) it is a limited liability company created, organized, existing and
in good standing under the laws of the State of Delaware and has the corporate
power to engage in the transactions contemplated by this Agreement; and
(e) there is no investigation, action, litigation or administrative
proceeding of or before any court, tribunal or governmental body currently
pending or, to its knowledge, threatened against it (i) that would be likely to
affect materially and adversely the validity or enforceability of this
Agreement, or (ii) that could reasonably be expected to result in any material
adverse change in its business, operations, financial conditions, properties or
assets or its ability to carry on its business substantially as it is now
conducted.
ARTICLE VI
MISCELLANEOUS
Section 6.01 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement.
Section 6.02 Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to CapitalSource, will be mailed,
delivered or telecopied and confirmed to it at 0000 Xxxxxxx Xxxxxx, 12th Floor,
Chevy Chase, Maryland 20815, Attention: Xxxxxx X. Xxxxxxx, Fax: 301/000-0000,
with a copy to Xxx X. Xxxxxx, Esq., Xxxxx & Hartston, L.L.P., 0000 Xxxxxxxxxx
Xxxxx, Xxxxx 0000, XxXxxx, Xxxxxxxx 00000, Facsimile: 000-000-0000; or, if sent
to CSFB, Repo Counterparty or Column will be mailed, delivered or telecopied and
confirmed to it at 00 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx Xxxxxx, Facsimile: 000-000-0000, with a copy to Xxxxxx XxXxxxxxx,
Facsimile: 000-000-0000.
Section 6.03 Binding Effect. This Agreement shall become effective when
it shall have been executed and delivered by or on behalf of each of the parties
hereto and thereafter shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns (and no other person
will have any right or obligation hereunder), except that no party shall have
the right to assign any of its rights, interests or obligations hereunder or
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any right, interest or obligation herein without the prior written consent of
the other parties hereto. Any assignment in violation of this Section 6.03 shall
be void ab initio.
Section 6.04 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall together constitute but one and the same
instrument.
Section 6.05 Amendments. Any provision of this Agreement may be amended
or waived if, but only if, such amendment or waiver is in writing and is signed
by the parties hereto.
Section 6.06 No Waiver. No failure on the part of any
party to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. Each waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
Section 6.07 Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby. The
parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
Section 6.08 Jurisdiction; Consent to Service of Process. To the fullest
extent permitted by applicable law, each of the parties hereto (a) hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement (a "Related Proceeding"), or for recognition or enforcement of any
judgment and (b) agrees that a final judgment in any such Related Proceeding
shall be conclusive and may be enforced in any other jurisdiction by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that a party may otherwise have to bring any Related Proceeding
against any other party or its respective properties in the courts of any
jurisdiction.
SECTION 6.09 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE SUBJECT MORTGAGE LOANS OR THE ACTIONS OF THE
PARTIES HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
HEREOF.
SECTION 6.10 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
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STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE PROVISIONS THEREOF CONCERNING
CONFLICT OF LAWS.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
CAPITALSOURCE FINANCE LLC
By: /s/
--------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON LLC
By: /s/
--------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON
MORTGAGE CAPITAL LLC
By: /s/
--------------------------------------
Name:
Title:
COLUMN FINANCIAL, INC.
By: /s/
--------------------------------------
Name:
Title:
SCHEDULE I
ELIGIBILITY CRITERIA
In order to satisfy the Eligibility Criteria, a Loan must:
1. be secured by a first lien on a skilled nursing facility;
2. be evidenced by an original Mortgage Note;
3. have been underwritten in accordance with Underwriting Guidelines and
Section 2.02(d) of this Agreement;
4. be eligible for inclusion in a REMIC and an SEC registered
securitization;
5. if such mortgage loan is a Portfolio Mortgage Loan, be approved as an
Approved Loan simultaneously with the approval as Approved Loans of all
of the mortgage loans which comprise the Portfolio of which such
mortgage loan is a part;
6. have an original principal balance of not greater than $30 million;
provided, however, that a mortgage loan with an original principal
balance of greater than $30 million may become an Approved Loan if such
larger balance is pre-approved in writing by Reviewer prior to
submission of such mortgage loan for approval pursuant to Section 2.02
of this Agreement; provided, further, however, that if such mortgage
loan is a Portfolio Mortgage Loan, the aggregate principal balance of
all of the mortgage loans in the Portfolio of which such mortgage loan
is a part does not exceed $50 million and no individual Mortgaged
Property in such Portfolio shall have a principal balance allocable to
it of greater than $30 million;
7. unless otherwise agreed to by the parties hereto, bear a floating rate
of interest (i) indexed to one-month LIBOR plus a spread of not less
than 5.50% or (ii) indexed to the Prime Rate plus a spread of not less
than 3%;
8. have an original term to maturity of not more than five (5) years;
9. be locked out from prepayment for no less than three (3) years from the
date of origination;
10. have an underwritten debt service coverage ratio of not less than 1.4
based on an 11.83% constant;
11. have a Loan-to-Value Ratio of not greater than 80% based on a 13.5% cap
rate;
12. not be delinquent or otherwise in default; and
13. not require future advances.
EXH. E-1
